The Turner Report into the future of pensions has now been published – the main recommendations, as expected, are that the pensionable age should gradually increase over the next 45 years (though to 68, not 67 as reported in the press), the state pension should be residence based and linked to increases in average earnings, and there should be a national pensions saving scheme (NPSS) that everyone should be automatically enrolled in unless they opt-out, contributed to by both employees and employers.
How popular are these recommendations likely to be? YouGov carried out a detailed poll, published earlier this week, looking at the future of pensions.
The first thing to note is that there is a very widespread acceptance that there is a problem – only 4% of people think there is not a pension crisis, and 69% think there is a serious crisis in pension provision. 87% of people think that ‘most’ people are not saving enough for their retirements, and 65% of people think that they personally are not saving enough for their old age.
Recognising that there is a problem with pensions does not, of course, equate to automatically supporting any and all proposals to deal with it. YouGov went on to ask a question that stated there there were only a limited number of ways of dealing with the future of pensions, and asking people which they would prefer – the options offered were making or encouraging people save more themselves, taxing people more, raising the retirement age, increasing immigration or simply letting people’s retirement incomes fall. Far and away the most popular solution was making or encouraging people to save more – chosen by 49% of people, following by increasing taxes – 18%. YouGov went on to ask which of the options people would find acceptable, and which would be their least favoured option – the only option acceptable to a majority of people was making or encouraging people to save more (supported by 69%). Increased taxes would be accepted by 39%, while raising the retirement age would be acceptable to only 33%. Reducing pensioners’ income was acceptable to only 5% of people, while increasing immigration was acceptable to only 13% – it was also the least popular option overall, named as such by 33% of people. YouGov also asked a more specific question on tax – only 9% of people said they would be willing to pay a lot more in tax if they thought hte money really would increase pensions, and only 39% would be willing to pay a little more. 45% said they wouldn’t be willing to pay any more tax at all, even if it would increase pensions.
So, if the public generally support more saving, and oppose a later retirement age, what are they likely to think of the specific proposals in the Turner Report? Pretty much as you’d expect: YouGov asked if people would support increasing the pension age to 67 (which, at the time, was expected to be Turner’s recommendation) – 39% said they would be in favour, 47% said they would be opposed.
Asked if employers should be compelled to contribute to a pension for their employees, 82% said they should, with only 25% opposed. Compulsory contributions by employers are generally criticised for adding extra labour costs to businesses, and therefore leading to job cuts or lower wages, YouGov therefore went on to ask if people would still support such a proposals if it lead to employers “either having to reduce pay levels, or cut the size of their workforce, or both”. While this obviously reduced the level of support, a majority – 54% – still supported proposals to force employers to contribute.
YouGov also asked respondents under the age of 60 how they personally would respond to an opt-out pension scheme like that subsequently recommended by Turner. 56% of people said they would remain in the scheme, while the overwhelming majority of those who said they would opt out said they would make alternate arrangements. Only 3% of people said they would opt out and not join a pension scheme.
YouGov’s findings therefore suggest that most people think more savings are the answer to the pension crisis, and that the majority of people would remain in an opt-out pension scheme – althought it remains to be seen how they react to the specific sort of contribution levels suggested by the Turner Report. On the other hand, there is far less support for increasing the pensionable age or increasing taxes.
YouGov also asked a series of questions about public sector pensions – 74% of people thought that public sector pensioners got a better deal than those who worked in the private sector and 60% of those thought they did not deserve this (predictably there was a huge difference between public and private sector workers on this question – 55% of public sector workers thought that, yes, they did deserve better pensions than the private sector). Asked about the government’s proposals for the future of public sector pensions, the most popular option was the government’s original plan to gradually increase the retirement age of public sector workers under 50 to 65, supported by 39% of respondents. 32% of respondents opted for the compromise agreed with the trade unions – that current workers should retire at 60, but future workers at 65. Amongst public sector workers themselves the most popular option was the compromise position, supported by 40% of public sector workers.